OECD-EU Conference on Policy responses to new … › future-of-work › Issues Paper_WEB.pdfreport will draw on the results of the OECD survey that was carried out between June and

OECD-EU Conference onPolicy responses to new forms of work

Issues NoteParis, 7 November 2018

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Policy responses to new forms of work: Initial findings from an international survey © OECD 2018

OECD-EU Conference on

“Policy responses to new forms of work”

Paris 7 Novembre 2018

Introduction

Global changes affecting the world of work are driving policymakers worldwide to review how policies in different areas – labour market, skills, social protection – can best respond. Many countries have seen growth in particular contract types that diverge from the “standard employment contract”, i.e. a full-time dependent employment contract of indefinite duration. While the use of temporary or casual contracts and the emergence of platform work may bring advantages, including flexibility for both employers and workers, concerns are being voiced around job quality and the potential negative impact of excessive and/or improper use of such contracts on equality, productivity and growth, fair competition among firms, and the sustainability of social protection systems.

The main question for policymakers is how to balance the opportunity offered by a diversity of employment contracts, on the one hand, with protections for workers and businesses, on the other. This issues note provides an overview of some recent and emerging policy responses to new forms of work, based on a recent survey of 43 countries, and identifies some key questions for discussion at the conference.

A number of global trends and reforms are leading to more diversified forms of employment. With the support of

the European Commission, the OECD is preparing a report on recent policy responses to these developments. The

report will draw on the results of the OECD survey that was carried out between June and September in 2018 on

recent and emerging public policy responses to new forms of work in OECD, EU and G20 countries. The question-

naire covered a range of policy areas including labour market regulation, social protection, collective bargaining

and skills. It was sent to Ministries of Labour (or the ministry with responsibility for labour market policy) in OECD,

EU and G20 countries and a small number of other countries. Responses from 43 countries were received.

The report will be published in the second quarter of 2019. This note presents some of the initial findings from the

survey and raises some key issues for discussion at the conference.


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Session 1: Worker classification (and misclassification)

Many countries acknowledge the challenge in classifying work that does not fit neatly within the traditional definitions of either employment or self-employment. Characteristics such as a lack of autonomy (e.g. over working hours or fees) or a dependency on a single client mark some self-employed workers out from the traditional notion of a self-employed entrepreneur, while at the same time, they are not covered by the protections typically associated with employment. Regulatory or fiscal incentives are driving the rise of dependent self-employment in some countries and may even be encouraging misclassification. New technologies enable platform work, in which questions of worker classification also arise.

Some countries may attempt to tackle this issue by giving official recognition to the category of dependent self-employment within labour law, which provides this group with a basic set of rights, benefits and/or protections. Such statuses (sometimes referred to as “intermediate worker categories”) exist in Portugal, UK, Italy, Austria, Germany, Spain and Slovenia – although most of these are not new developments. However, critics say that where there are strong incentives for misclassification, an intermediate worker category may provide an additional opportunity for unscrupulous firms to misclassify workers, placing individuals who should otherwise be employees in this category.

Where there are concerns about misclassification and false self-employment, countries have taken policy action to tackle this issue. In Belgium, there are existing regulations that presume an employment contract in certain “at-risk” economic sectors (e.g. construction, transport, cleaning and agriculture). The UK, Portugal, Spain, Slovenia and Sweden also mentioned efforts to strengthen the labour inspectorate.

Questions for discussion

• Are intermediate worker categories a solution? Are there examples or principles of best practice for such cat-egories?

• Where there is a desire to extend employment rights and protections to dependent self-employed workers, is the solution to reform the worker classification system? Or is it preferable to widen eligibility for specific rights and protections (e.g. collective bargaining or social protection)?

• Who should take responsibility for tackling misclassification: labour inspectorates, tax and social protection authorities, labour courts or platforms and other businesses?

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Session 2: Working conditions in non-standard work

Many countries expressed concern about specific contract types that diverge from the standard employment contract, including variable hour and temporary contracts.

Variable hour contracts

“Variable hour” (or “on-call”) contracts are special forms of atypical part-time contracts in which the hours worked can vary from one week to the next and may even be zero in some weeks. These contracts exist in some but not all countries. Some countries described the rationale for such contracts, i.e. enhancing flexibility within the range of available employment contracts and thereby enabling employers to meet variable labour needs. A few countries reported recent or ongoing discussion about introducing variable hour contracts for the first time. In Estonia and Lithuania, recent proposals to introduce variable hour contracts were shelved following discussions with social partners.

Countries where such contracts already exist tended to experience considerable public debate on the topic in recent years, particularly on the topic of zero hour contracts (where they exist). Most policy responses centred on how to moderate the consequences of unpredictability in working hours on employees’ overall earnings, earnings volatility, and their ability to plan ahead. Ireland, New Zealand and the Netherlands reported efforts to establish minimum notice or compensation for cancelled shifts. Finnish policy reforms have addressed issues with rostering, sick pay, and termination of the employment relationship. In the UK, a higher pay rate for hours not guaranteed is under consultation.

Some countries reported attempts to restrict the circumstances in which variable hour contracts could be used (e.g. Finland) or to give employees the right to request a more predictable contract after a certain period of time (e.g. UK, Australia). Other policy responses such as removing exclusivity clauses (e.g. in the UK for zero hour contracts) and obligations to accept work (e.g. New Zealand and Ireland) may be intended to redress potential imbalances in bargaining power between employer and employee.

Temporary contracts

Many countries reported efforts to discourage the overuse/misuse of temporary and fixed-term contracts, or where they are used, to encourage their use as a “stepping stone” to more open-ended employment.

France, Italy and Spain (among other countries) have attempted to limit the use of temporary and fixed-term contracts by placing restrictions on their use, such as limiting their duration, the number of possible renewals and/or the circumstances in which they can be used. France, Italy and Spain have also reported attempts to use financial disincentives to discourage their use (and to take into account the social costs of using such contracts), in the form of higher unemployment insurance contributions. In Italy and Spain, there are financial incentives for converting a temporary contract into a permanent job.

There have been proposals in the Netherlands to make standard employment contracts more flexible, e.g. extending probationary periods for new employees and reducing firms’ unemployment insurance contributions for open-ended contracts.


• Is there a place for variable hour contracts in a labour market that works for both firms and workers? Can policy measures ensure adequate working conditions in this type of work?

• In zero hour contracts, can balance in bargaining power between employer and employee be achieved (e.g. by removing the obligation to accept work)?

• How should open-ended employment be encouraged, e.g. by making the use of temporary contracts more re-stricted, making the use of open-ended contracts more flexible or through financial incentives?


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Session 3: Extending worker voice to dependent self-employed

A number of countries raised the question of how to increase the bargaining power over working conditions and remuneration of those workers who sit somewhere between the traditional definitions of employment and self-employment. In some countries (including EU countries), competition law prohibits independent contractors from unionising and negotiating collectively. In the platform economy, workers may face further barriers to organising collectively if they are working alone and separated by different geographies, languages or legal contexts. It may also be difficult for workers to determine whether the counterpart for social dialogue and collective bargaining should be the platform or the client.

Although it is not a recent reform, federal legislation for labour relations in Canada uses a definition of “employee” which explicitly includes dependent contractors, ensuring that they cannot be excluded from collective bargaining and effectively giving them an intermediate status between employee and independent contractor. This approach has been motivated by the idea that collective bargaining is a way of addressing a power imbalance and that given similarities between dependent contractors and employees, they should not be excluded. The Polish Parliament is currently working on a draft amendment which will grant the right to establish and join trade unions to workers engaged under civil law contracts (e.g. contractors or self-employed).

Some countries have taken steps to extend collective bargaining rights to specific sectors/occupations. In Ireland and Austria, freelance journalists have rights to collective bargaining. The Dutch government said that it is working with the cultural and creative sector to strengthen freedom of association. Since 2016 in France, platform workers have been able to form a trade union organisation, to join it and to assert their collective interests through it. Denmark and Italy reported government efforts to encourage platforms to join discussions with workers and unions in the aim of concluding collective agreements.


• What should be the respective roles of government and the social partners in extending worker voice to those in non-standard work?

• Which subgroups of self-employed should have the right to bargain collectively, if any?

• Should (further) exemptions for certain self-employed be introduced into competition law? On a sector basis, on the basis of a principle or test, or should the burden of proof be reversed (i.e. presumption of an employment contract with a test for “genuine” entrepreneurship)?

• What is the right balance between labour market regulation and collective bargaining in defending the rights of platform or other self-employed workers?

• Where there is no right to collective bargaining, are there other means for imposing a set of minimum working standards for platform or other self-employed workers

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Session 4: Addressing tax incentives for self-employment

In some countries, differences in tax burdens (as well as employment protections) between employees and the self-employed have created strong incentives for employers and/or individuals to prefer self-employment over standard employment relationships. If not well targeted, tax incentives designed to promote entrepreneurship may also encourage misclassification and false self-employment.

Some countries have moved towards a more tax neutral approach, on the basis that tax treatment should not influence decisions concerning the type of employment contract. In Austria, concerns that employers were using independent contractors to reduce taxes and avoid regulation led the government to gradually integrate them into the social protection system and, since 2008, their social protection contributions are aligned to those of standard employees. In Italy, since 2012, pension contribution rates for dependent contractors have been gradually increased to make them equivalent to those paid for standard employees.

Other countries have faced barriers in trying to address tax incentives and misclassification. In the UK, an effort to increase social protection contributions for self-employed was announced in the 2017 Spring Budget but later dropped due to negative reaction. In the Netherlands, where unincorporated self-employed workers are not subject to most social security contributions and are eligible for income tax deductions, the government has attempted to shift the burden of misclassification to the employer, making them liable for insurance and tax payments if the contractor is found to be an employee. However, enforcement of the new measure is pending following negative reaction.

Taking a contrasting approach, the Belgium government has introduced favourable tax treatment for additional “occasional” income sources in order to promote more flexible working arrangements. A 2018 law exempts income from such sources up to EUR 6,130 per year from social security contributions and income tax.


• Can tax incentives for entrepreneurship be better targeted? Are there barriers to doing so?

• Should tax neutrality between standard employment and other forms of work be an objective

Documents

OECD-EU Conference on Policy responses to new … › future-of-work › Issues Paper_WEB.pdfreport will draw on the results of the OECD survey that was carried out between June and